Home >> Daily Dose >> FHA Announces Policy for Hurricane-Affected Homeowners
Print This Post Print This Post

FHA Announces Policy for Hurricane-Affected Homeowners

On Thursday, the Federal Housing Administration (FHA) announced that it was updating its menu of foreclosure prevention options to allow borrowers affected by the natural disasters of 2017 with delinquent FHA-insured mortgages easier access to bring their mortgages current without increasing their interest rates or monthly payments.

The updated policy is aimed at helping struggling borrowers in Puerto Rico and the U.S. Virgin Island impacted by Hurricanes Irma and Maria. The FHA is also providing a final 30-day extension of its foreclosure moratorium to allow distressed FHA-insured homeowners in Puerto Rico and the U.S. Virgin Islands an opportunity to find a permanent mortgage resolution.

“We need borrowers to contact their servicers right away and begin the process of finding a permanent solution to their mortgage situation,” said Brian Montgomery, FHA Commissioner.  “We have a lot of options available to help FHA-insured families keep their homes but every day we wait, those options become more limited.  Meanwhile, we intend to monitor our servicers very closely to make sure eligible families get the mortgage relief they qualify for.”

In a letter to mortgage servicers, the FHA said that it "intended to reduce foreclosures and minimize losses to the Insurance Fund by expanding certain loss mitigation assistance to borrowers in default." Additionally, the FHA said that the mortgagee letter also provided a 30-day disaster foreclosure moratorium for certain FHA-insured mortgages in affected counties in Puerto Rico and the U.S. Virgin Islands.

The FHA said that borrowers could qualify for the updated Disaster Standalone Partial Claim if they met the following conditions:

  • They live within the geographic boundaries of the applicable Presidentially declared disaster areas in Puerto Rico and the U.S. Virgin Islands;
  • Their ability to make mortgage payments is directly or substantially affected by the disaster;
  • Their mortgage was no more than 60-days past due prior to the date of the Presidentially declared major disaster; and
  • They have not already been approved for a forbearance or other loss mitigation option(s).

In February, FHA introduced the Disaster Standalone Partial Claim option to help struggling borrowers impacted by 2017 natural disasters to resume their pre-disaster mortgage payments without payment shock.  This option was intended to be used if all other home retention options were exhausted.  Effectively immediately, FHA’s “Disaster Standalone Partial Claim” will now be the first mortgage relief option available for hurricane victims with FHA-insured homes located in Puerto Rico and the U.S. Virgin Islands.

About Author: Radhika Ojha

Radhika Ojha is an independent writer and editor. A former Online Editor and currently a reporter for MReport, she is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Houston, Texas.

Check Also

The Week Ahead: Headed for Housing Market Normalization?

In advance of CoreLogic's next Home Price Index release, CoreLogic Deputy Chief Economist Selma Hepp notes that "since mortgage rates have hit the psychological 5% benchmark, buyers are stepping back." Here's what to expect in The Week Ahead.

Subscribe to MDaily

MReport is here for you to stay on top of important developments in the mortgage marketplace. To begin receiving each day’s top news, market information, and breaking news updates, absolutely free of cost, simply enter your email address below.